Malaysia hopes to base its trade with Iran on the gold dinar soon as a first step in decreasing dependency on the US dollar in international trade, Prime Minister Dr Mahathir Mohamad said today.

Mahathir, who is also finance minister, was responding to a question at a news conference on whether Malaysia would realise its long-held ambition to start using the dinar this year.

"Well, we hope very soon. Maybe (this year) we'll see whether we can do it with Iran," he said after opening an international convention on the gold dinar which, according to Islamic law, is roughly 4.3 grams in weight.

Malaysia had discussed the issue with Iran and "they decided that they should go ahead," he said.

Greedy currency traders

Mahathir proposed more than a year ago that the gold dinar be used for international trade to prevent a repeat of the currency crisis which devastated Asia in 1997-1998.

The veteran premier, who blames "greedy currency traders" for Asia's downfall in the crisis, said local gold prices would determine the exchange rate for the local currency against the dinar.

Mahathir acknowledged that Malaysia was more enthusiastic about switching to the gold dinar than most other countries.

"We are ready but many other countries aren't. Maybe they don't quite understand the concept yet or they find it hard to change existing systems," he said.

"Governments move very slowly. They have certain legislation to be made, bureacratic procedures. We have to be patient.

Secretariat in place

"There is a great deal of interest now (from other countries) but the mechanisms have got to be worked out. It takes a little bit of time."

In his opening address to the conference, Mahathir said gold was a "more stable reference currency" than the US dollar which has recdently depreciated sharply against the Euro.

Malaysia has already set up a secretariat within the central bank to promote the use of the gold dinar in international trade. - AFP